Call to construct oil pipeline to connect up-country regions

By Lusekelo Philemon

8th May 2012

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The government has been challenged to seriously embark on the construction of an oil pipeline connecting Dar es Salaam port and up-country regions in order to reduce skyrocketing prices of imported petroleum oil products in the country.

An economist-cum-lecturer at Mzumbe University’s School of Business, Dr. Honest Ngowi, made the suggestion here recently at a forum organized by Hakikazi Catalyst, an Arusha-based civil society organization.

The forum was meant to discuss key issues contributing to inflation and high cost of living in Tanzania.

According to him, it is too costly to rely on tankers to transport petroleum products from Dar es Salaam to up-country regions.

“To me a pipeline is the cheapest means of transport for oil than other means available in the country,” Dr. Ngowi said.

He suggested the need to change the means of transport and embark on the construction of a pipeline as in the case of Zambia through the Tanzania and Zambia Pipeline (TANZAM), which is used to pump oil from Dar es Salaam port to Ndola in Zambia.

“Using tankers is what makes the prices of petroleum products high as lorry owners have to top up their profit, but if use a pipeline we’ll be saving a lot and hence be able to reduce the price of the products,” he said.

Citing an example, Dr. Ngowi said: “Transporting fuel from Dar to Mwanza using tankers makes the prices of the products very high, forcing the end-user to buy them at a higher price.”

He said the final prices of oil products transported by lorries were influenced by a a number of factors including poor road infrastructure and owners having to top up prices to make a profit.

Improving the railway transport system would be another important step in pushing down the prices of goods in the country.

Tanzania relies on two railway systems - Tanzania Zambia Railway Authority (TAZARA) and the central railway line, both of which are not fully utilized.

Six years ago, the government had a plan to invest in a Dar es Salaam-Mwanza-Kigoma oil pipeline project as well as a crude oil refinery with a capacity of 200,000 barrels a day, both worth USD 2.6bn (approx.3.02tr/-).

The project was given to a consortium of foreign companies led by Qatar-based Noor Oil and Industrial Technology (NOIT) Limited to construct the Dar es Salaam-Mwanza oil pipeline project, with an extension to Kigoma region, but since then nothing has been implemented.